Palatin Technologies Inc. Q3 2023 Earnings Call
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Greetings welcome to intelligence third quarter fiscal year 2023 operating results conference call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Before we begin our remarks I would like to remind you that statements made by Palatin are not historical facts and maybe forward looking statements.
These statements are based on assumptions that may or may not prove to be accurate and that the actual results may differ materially from those anticipated due to the variety of risks and uncertainties discussed in the company's most recent filings with the Securities and Exchange Commission.
Please consider such risks and uncertainties carefully in evaluating these forward looking statements by Pelicans prospects now I would like to turn the call over to Dr. Carl Spanner, President and Chief Executive Officer of Palatin. Please go ahead.
Thank you good morning, and welcome to the <unk> third quarter fiscal 2023 call I'm about to cross banner CEO and President of Palatin with me on the call today is Steve Wills, <unk> Executive Vice President Chief Financial Officer, and Chief operating Officer.
Now I'll turn the call over to Steve and he will give the financial and operating updates Steve. Thank.
Hello, everyone.
Regarding financial highlights I'll start with finally see if at all.
D. C is our FDA approved commercial product for premenopausal women with hyperactive sexual desire disorder, our HST day.
The goal of the balance sheet program is to demonstrate commercial products value in the marketplace with an objective of licensing the U S rights to a committed women's health care company.
For the third quarter ended March 31, 2023, gross product sales were $3 4 million.
An increase of 31% over the prior quarter.
And an increase of 165% over the comparable quarter last year.
Net product revenue of $1 2 million increased 16% over the prior quarter and increased 453% over the comparable quarter last year.
Total prescriptions dispensed increased 27% over the prior quarter and increased 140, 47% over the comparable quarter last year.
We have achieved five consecutive quarters of double digit growth.
Refill rates commercial insurance reimbursement and net revenue per prescription dispense continued with positive and impactful results and trends versus the prior quarter and comparable quarter last year.
We are particularly pleased that by at least these quarterly net product revenue exceeds <unk> quarterly operating expenses.
Yep that means we are not losing any money on VLCC.
Also we were issued a patent titled use of <unk> in patients with controlled hypertension with a term through April 29th 2041.
Regarding other Palatin did receive $4 7 million in January 2023 from the state of New jerseys technology business tax certificate transfer program sponsored by the New Jersey Economic development Authority.
Moving over to the actual financial operating results for the third quarter ended March 31 2023.
Regarding revenue total revenue consists of gross product sales are by Lucy net of allowances and accruals and license and contract revenue.
I covered the fee revenue by at least the revenue numbers prior.
Regarding operating expenses total operating expenses were $8 5 million compared to 8 million for the comparable quarter last year. The increase in operating expenses was mainly the result of higher spending on our marketing efforts of ITC.
Regarding cash flows.
Allison's net cash used in operations was $1 4 million compared to net cash used in operations of $9 5 million for the same period last year.
The decrease in net cash used in operations is mainly due to the companys receipt of proceeds from the state of New Jersey.
Nols stands for net operating losses, and working capital changes for the quarter ended March 31 2023.
Regarding net loss Allison's net loss was $7 1 million or <unk> 63 per basic and diluted common share compared to a net loss of $7 6 million or <unk> 80 per basic and diluted common share for the comparable quarter last year.
The decrease in net loss over the comparable quarter last year was mainly due to an increase in net product revenue by Lucy of $1 million offset by an increase in operating expenses of approximately 500000.
Regarding.
<unk> cash position.
As of March 31, 2023.
Cash and cash equivalents were approximately $19 6 million plus.
Plus approximately $1 7 million of accounts receivable this.
This was compared to cash and cash equivalents of $21 2 million with $6 $5 million of accounts and other receivables as of December 31 2022.
And $29 9 million with $1 8 million of accounts receivable as of June 32022.
Based on our current operating plan, we believe that existing cash and cash equivalents and receivables will be sufficient to fund currently anticipated operating expenses through calendar year 2023.
I'll turn the call back over to Carl.
Thank you Steve.
1000, we were focused on establishing the Atlanta court system as a target for safe and effective medicines to treat inflammatory and autoimmune diseases and to develop a pipeline of highly effective drugs with unparalleled safety.
Our research and our laboratory and in collaboration with academic thought leaders, we continue to advance our understanding of them a lot of court system identify opportunities for novel innovative Therapeutics. Our research efforts are helping us to design, a better clinical trials and are becoming a key support purposes development activities.
We have three active clinical programs based on the latter court agonist developed from our research. In addition, we have two new ocular programs ready pending resources to begin the activities required to start clinical studies.
We are actively enrolling patients in the following clinical trials melody won a phase III study in dry eye disease.
The phase II study evaluating oral P. L E 177, a selective <unk> one receptor agonist.
So with colitis patients and breakout a phase II study in diabetic patients with kidney disease.
Anticipate all three clinical studies will have data readouts in calendar 'twenty two 'twenty three.
Moving on to some of the highlights for the third quarter.
He continues to show impressive growth as Steve mentioned five quarters of double digit increases in all key metrics and we anticipate this growth will continue.
We continue to make significant progress in establishing Atlanta Gordon system as the innovative target for therapeutics to treat a variety of inflammatory diseases.
As I said, we are enrolling patients in three clinical studies.
Our ocular programs continue to make some impressive advances this quarter. We are very excited by the emerging product profile for P. L 9643, linerboard based therapeutic for dry eye disease P. O 94, three is highly differentiated from current treatments with excellent ocular tolerability and broad efficacy that we believe will make people 90.
For three of the leading treatment for dry eye disease, we presented data from the analysis of the lead and population of the PL nine 643 melody one phase III trial at the annual meeting of the Association for research in vision and ophthalmology.
Your mindset for three demonstrated broad efficacy with statistical separation across multiple signs and symptoms of dry eye disease, and an excellent ocular tolerability and safety profile with no ocular adverse events.
This analysis was important allowing us to confidently set the primary sign and symptom endpoints Oracle ordering a secondary endpoint analysis methods and sample size for the double blind segment of the melody one phase III trial.
We also hosted a key opinion leader event for investors with very exciting data for melody one phase III trial was presented if you've missed this event a link to the replay can be found on our website.
We also presented data at ARVO NPL 90, 588 on Atlanta based treatment for glaucoma and a preclinical rabbit studies PL 9588 showed competitive effects on intraocular pressure with a single topical dose lowering inter ocular pressure the magnitude similar to or greater than the positive controls.
<unk> and Tim along with the effect lasting up to 24 hours. This important program is now ready to advance into.
<unk> activities on the way to clinical trials.
Monaco, who know how to cut programs also made significant advances with multiple presentations at scientific meetings and publications in peer reviewed journals as well as continuing to enroll patients.
In phase II trials.
Our expertise with one accord and systems and our innovative clinical programs are supporting our business development activities discussions with potential partners for our programs has increased and we remain optimistic that we will enter into one or more partnerships to advance our programs.
I'd like to thank you for listening to the <unk> third quarter fiscal 2023 conference call you can find additional information on our science and clinical programs on our website Www Dot Palatin Dot Com you can also find additional information on <unk> at <unk> Dot Com website, Stephen I would like to thank you and we'll now open the call to questions.
Okay.
At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
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For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, while we poll for questions.
Your first question for today is coming from Joe P. N genius at H C. Wainwright.
Hey, Hey, guys. Good afternoon. Thanks for taking the question. So first wanted to start with by Lee C. So nice to see the continued early traction here. So just curious what is the percent of inventory that you usually keeping it either you know a percentage in the distribution centers and what are your current.
Plans to improve your ongoing efforts to improve your gross to net at this point at this point.
Hey, Joe it's Steve Thanks for the question there.
The way our distribution is set up we actually only have one.
Specialty pharmacy called Nipper, So we actually sell to the nipper three PL.
And then the nipper three PL if you will.
Sales to the sell through the pharmacy.
We do a what I believe a very good job of making sure our dispensers for the month the quarter.
Pretty much match up with the sales, which is how we actually reported so for the first quarter March 31, 'twenty three we had prescription dispense a little under four 4000 for the quarter and that's pretty much. What we had that we had sold to the three PL. So theres, just a point or two different different in that regard too.
We have virtually nothing in.
In the in the distribution chain, that's not already been sold.
That's yeah go ahead sorry.
Pardon me of your question is what what else are we doing.
Well, where our strategy is we've been very clear, we're not looking to put it.
Significant numbers.
Salespeople feet on the ground. If you will are our target is to is to do a very informed and measured digital social media campaign. We we spent a lot of time trying to make sure. We have the right algorithms. If you will for when when patients are searching to for this condition and in a N a.
A treatment option.
That they land on <unk>, we do have a few sales folk, but theyre, mainly inside and remote.
Albeit they do do a little bit of traveling so we're going to continue the digital and social media.
Since since our metric is to show value.
Have somebody be able to upon review get very comfortable that they can extrapolate the numbers based on what we're doing we think we can do that we can show that.
It's been successful from pub, our target model standpoint, we five consecutive quarters of double digit growth. That's both at the net sales level.
And also with the prescriptions dispensed we are increasing demand, but that's not our top metric our metric was to make sure. We got significant insurance coverage, making it accessible to the patients possible. We now have over two thirds of all of our dispensers are covered by insurance three quarters of those dispenses the patient actually pays.
Zero. So we think we have some very robust insurance coverage in that regard. So we're going to continue the the the Paas, Joe which is increasing.
The increase in demand a bit making sure that our net.
Gross to net number is good.
And we're now into the position, where we're not losing any money on policy and.
I'm looking forward to the time when someone sees the value that we've that.
But we've had yield and we ended up doing a a licensing collaboration or sell the asset at some point in the future.
Great I appreciate that color. So you know what my my second question I'm going to hop over dry eye cause you. Just are you guys. Just recently held a K all event on that.
So I'm going to ask a quick question on 80 177 for ulcerative colitis. So just curious when you guys announced later this year. The first data set what kind of metrics are we gonna be a potentially a given.
What.
Joe This is Carl so if this is predominantly a proof of concept study and it's it's a it's really done by imaging so they're going to be as a of colonoscopy and we're looking at biopsy and reduction of inflammation and damage to lesions.
So this system is assembled the civil Mayo score.
You also get additional things like reductions in and you know a bloody stools assault and other common metrics that are used.
In these studies, but its predominant this is really a study.
It's really looking for.
Direct evidence of the reduction of the inflammation and damage that's occurring in the call.
Great. Thanks, guys.
Yes.
Your next question for today is coming from Michael Higgins Ladenburg Thalmann.
Thanks, Edward Thanks, guys for taking the questions. Congrats again on all the pipeline progress. This spring certainly kept us quite busy and thanks for putting together cable that's very hopeful.
Not much new in the press release here, we do have two questions.
First of all along the lines of Joe's thinking on.
What we're seeing here the allowance of project returns, we're seeing it as a relatively high percent of gross sales seems to be sticky there. Despite the time since launch.
It accounts for potential returns may include exploration dates as well as the months Overstocking of course, so surprised to see the rate on gross sales remains so high for so long just trying to get an understanding of why that is and then more importantly, when it might come down as that will accelerate reported net sales. Thanks.
Yeah, Michael I'm not sure I'm. Following your question regarding the stickiness or are the gross sales it actually is.
We're increasing every quarter the gross sales the net sales are increasing.
For the most part every quarter, hence the double digit growth.
We have very little allow.
Allow us we have very little allowances for returns because we don't have much and from a return standpoint. So.
If you could clarify the question.
A bit more I'd appreciate but again, we have a gross and net sales every quarter.
The spreads are getting better other than the first quarter. The difference. It did we did have a lower yield for net sales for the first quarter, but that was a 100% attributable to the first quarter. The insurance reimbursement was not as high and Thats, primarily because of the deductibles that normally head in the <unk>.
First quarter first half of the year and as I look into the second quarter, where we're back up to where we were prior.
Sure the allowance of product returns as our accounting measure that's been used for all product launches and it provides the investors or anyone I guess.
Some insights from the accountants into what potentially may be return and it's highly regulated it's something that's not.
And that's something that it's a very subjective but it comes directly from dating and then also just returns what's coming back in pharmacy may over subscribed and then it goes back usually that wears off after the first say 12 months, but we're past that now so seeing its still up there is a bit surprising we've not.
Model is we're pretty conservative in that but eventually that drops here. So far we're about 75% of gross sales is a long term project returns where at this stage of the launch typically it's below half. So at some point that should turn and when that does that its net sales. It's a great accelerator. So we're just trying to gauge it.
When that might come.
I can help you win it might not come it's not going to come.
The data that you're referencing is not accurate, 100% not accurate we have we have zero.
Indeed in the channel.
The three PL that we sell to they pretty much just buy what they need for the week based on the sales that are going to be going over to the pharmacy and we're able to do that since we only have one pharmacy and from a distribution standpoint, we have one three PL and they're both housed in the same industrial park, which is nipper.
So I couldnt stress any greater I have no problem with stating that that information is 100% inaccurate, we do not expect anticipate any <unk>.
Significant allowances coming coming back there's nothing in the channel to do that and we actually have very very low patient returns of the product.
Yes, I'm just being in the 10-Q. This morning, that's what I'm referencing that but I appreciate the feedback there.
One question for you, we're seeing a lot in the pipeline advancing of course in ophthalmic conditions.
You've expanded into Ulster quietest diabetic nephropathy, but.
He obviously has a proven and female sexual dysfunction. We're just wondering about the potential and the BCD given the rationale there and some success with my own accord and the agents. Thanks.
Sure.
Michael we've had conversations with others before.
You are clearly obesity Mcf for <unk> is a very near and Dear to the company and certainly to my heart and we've done a lot of resource were fair and we are certainly in light of the.
The expanse of the quick one inhibitor class.
In the marketplace and the potential multi one.
100, plus billion dollar market. There we are certainly actively looking at our options in that space.
Our belief is based on what we our research work in very recent discussions with prescribers of the good ones.
There is a very.
Key and important role for the land Accordant agonist in the treatment of obesity.
And we're evaluating that and I would suggest to you you'll hear more about it in the upcoming quarters as that plant comes into Finalization. We are very interested in that and we do think it's a phenomenal opportunity.
Awesome I appreciate it you bet thanks, guys yeah.
Okay.
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We have reached the end of the question and answer.
<unk> and I will now turn the call over to management for closing remarks, thanks, Steve I'd like to make a quick statement yeah I just.
Regarding Michael Higgins a question on the on the allowance and the accruals what he's actually referencing is in our 10-Q.
Specifically on note.
And the first notes.
Note three we breakout between gross sales to net sales so actually for the three months ended March 31, 23 gross sales were $3 4 million.
Net sales were $1 2 million.
The difference is is what it costs us to go from gross to net.
We have a WAC of $899.
But we have to pay fees of the pharmacies.
Fees reimbursement, if you will to the Pbms and the various insurance coverage and all of the all the other various standard and customary expenses that you have when you go from gross to net there is 100% very little if none.
No charges related to allowances for for that come back and actually if you look at our March 31, 2023 quarter the.
The net sales as a percentage of the gross sales actually increase the provision for all the various expenses was approximately 80% in the first quarter of March March of 'twenty, two and its now down to 65% for.
For the first quarter of 'twenty, three very significant increases all positive. So I just wanted to clear that opposite in mind. Thank you Carl.
So I'd like to thank everyone for participating in the <unk>.
Third quarter fiscal 2023 call.
Steve and I couldn't be more excited about what we're doing there was a tremendous quarter with progress on all the programs.
I think we really seem to be hitting it pretty well right now and we're quite enthusiastic about the future and with the rest of the year is going to bring.
So with that being said thank you all for participating we like Stephen I'd like it to have a great day, and we look forward to continue updating you on our progress.
Ed.
And then on the rest of 2023, so thank you.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.